<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ALBERTSONS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
ALBERTSON'S, INC.
250 PARKCENTER BOULEVARD
P.O. BOX 20
BOISE, IDAHO 83726 Albertsons Logo
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April 28, 2000
Dear Fellow Stockholder:
It is our pleasure to invite you to attend the 2000 Annual Meeting of
Stockholders. The meeting is scheduled for 10 a.m. (Mountain Daylight Time)
Thursday, June 15, 2000, at the Idaho Center, 16200 Can-Ada Road, Nampa, Idaho.
PLEASE NOTE THE NEW DATE AND LOCATION OF THE MEETING. In an attempt to
accommodate stockholders, we have moved the meeting from the Memorial Day
weekend. We have also moved it to a larger facility.
This year you are being asked to:
- - Elect directors,
- - Ratify the appointment of independent auditors for the fiscal year that ends
February 1, 2001, and
- - Consider two stockholder proposals that may be presented at the meeting.
You will find further information about these items and our Company in the
following pages. We are giving you:
- - Information about the nominees for election to the Board of Directors,
- - Information about the auditors we have appointed, and
- - Information about the two stockholder proposals -- and why your Board of
Directors opposes both of them.
It is important that your shares be represented. We urge you to vote, even if
you cannot attend the meeting.
We look forward to personally greeting those stockholders able to attend.
Very truly yours,
ALBERTSON'S, INC.
/S/ GARY G. MICHAEL
Gary G. Michael
Chairman of the Board
and Chief Executive Officer
<PAGE> 3
TABLE OF CONTENTS LOGO
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Notice of the Annual Meeting of Stockholders 1
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Proxy Statement 2
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Appointment of Proxy Holders 2
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Voting Methods 2
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Voting Securities and Principal Holders Thereof 4
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Shares Beneficially Owned as of March 15, 2000 4
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The Board of Directors 6
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Election of Directors (Proposal 1) 7
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Nominees for Election as Class II Directors 7
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Continuing Class III Directors 9
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Continuing Class I Directors 10
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Director Emeritus 12
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Certain Transactions 13
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Committees and Meetings of the Board of Directors 15
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Compensation of Directors 16
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Compensation of Executive Officers 16
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Summary Compensation Table 16
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Option Grants in Last Fiscal Year 17
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Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values 18
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Retirement Benefits 18
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Salaried Pension Plan Table 19
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Compensation Committee Report 20
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Performance Graph 22
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Ratification of Appointment of Independent Auditors
(Proposal 2) 23
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Stockholder Proposal (Proposal 3) 23
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Board of Directors' Statement in Opposition 24
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Stockholder Proposal (Proposal 4) 25
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Board of Directors' Statement in Opposition 26
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Other Matters 27
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Deadline for Receipt of Stockholders' Proposals 27
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</TABLE>
<PAGE> 4
[Map showing location of Albertsons 2000 Annual Stockholders' Meeting]
<PAGE> 5
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS LOGO
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<TABLE>
<S> <C>
TIME: 10 a.m. Mountain Daylight Time
DATE: Thursday, June 15, 2000
PLACE: The Idaho Center
16200 Can-Ada Road
Nampa, Idaho
</TABLE>
AGENDA:
- To elect six directors,
- To ratify the Board of Directors' appointment of independent auditors,
- To vote on two stockholder proposals that may be made at the meeting, and
- To transact any other business that may be brought before the meeting in
accordance with the By-Laws.
WHO MAY ATTEND?
- Stockholders of record at the close of business on April 18, 2000
- Representatives of stockholders, if authorized in writing
- Invited guests
All stockholders are cordially invited to attend the meeting in person.
WHO MAY VOTE?
- Any stockholder of record at the close of business on April 18, 2000
- Any representative of such a stockholder, if authorized in writing
Even if you cannot attend the meeting, we urge you to vote. Please refer to
pages 2-3 of the accompanying proxy statement for Albertson's voting procedures.
By Order of the Board of Directors
/s/ KAYE L. O'RIORDAN
Kaye L. O'Riordan
Vice President and Corporate Secretary
April 28, 2000
YOUR COPY OF THE COMPANY'S ANNUAL REPORT FOR THE
FISCAL YEAR ENDED FEBRUARY 3, 2000 IS ENCLOSED.
<PAGE> 6
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PROXY STATEMENT
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This proxy statement is being mailed to stockholders on or about April 28, 2000,
in connection with Albertson's solicitation of your vote at its 2000 Annual
Meeting of Stockholders. Please read it carefully because it contains important
information about admission to the meeting, voting procedures and the matters on
which you are being asked to vote.
APPOINTMENT OF PROXY HOLDERS
Your Board of Directors asks you to appoint Gary G. Michael, Michael F. Reuling
and Thomas R. Saldin as your proxy holders. As such, they will vote your shares
at the 2000 Annual Meeting of Stockholders as you instruct them. To appoint them
as requested, just sign, date and return the enclosed proxy card in the
pre-addressed, postage-paid envelope provided.
To direct them as to how to vote your shares, just mark the boxes on the proxy
card that represent your choices. They will follow your instructions. On any
item for which you do not mark a box, they will vote as recommended by the Board
of Directors.
VOTING METHODS
If you hold your shares of record, you can vote in one of three ways:
- By calling toll-free (in the United States) 1-800-840-1208 on a touch-tone
phone. Available 24 hours a day. Be sure to have your proxy card available
to enter your control number.
- By visiting the Internet site at http:/www.eproxy.com/abs/.
- By marking, signing, dating and promptly returning the proxy card. We have
enclosed a postage-paid envelope (if mailed in the United States) for your
convenience.
If you hold your shares in the name of a bank, broker or other holder of record,
you must follow the instructions from the holder of record in order to have your
shares voted. Some banks and brokers may offer telephone and Internet voting.
Any stockholder of record attending the meeting may revoke his or her prior vote
by voting in person.
If you plan to attend the meeting and your shares are held in the name of a
broker or other nominee, please bring a statement or letter from the broker or
nominee confirming your ownership of shares.
If you own shares of record, you may revoke your proxy at any time before the
voting at the meeting. To do so, you must either:
- Write a letter to that effect to the Corporate Secretary, 250 Parkcenter
Boulevard, P.O. Box 20, Boise, Idaho 83726. Your correspondence must be
received before the meeting.
- Submit a signed proxy statement that is dated later than the original proxy
and is delivered by telephone, Internet or mail in a timely manner.
- Vote by ballot at the Annual Meeting.
All shares that have been properly voted -- whether by telephone, Internet or
mail -- and not revoked will be voted at the meeting according to your
instructions. If you sign your proxy card but do not give voting instructions,
the shares represented by that proxy card will be voted as recommended by the
Board of Directors.
At the close of business on the Record Date (April 18, 2000), 423,781,921 shares
of Albert-
2
<PAGE> 7
LOGO
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son's common stock were outstanding and entitled to vote at the meeting. For
each share of stock held, the stockholder is entitled to cast one vote on each
matter before the meeting.
A quorum, which is a majority of the outstanding shares as of the Record Date,
must be present to hold the Annual Meeting. We calculate a quorum based on the
number of shares represented at the meeting, either in person or by proxy.
If a quorum is present:
- We will hold an election of directors. Each outstanding share of stock is
entitled to cast one vote for each director position. Any nominee receiving
a plurality of the vote will be elected. Abstentions and broker non-votes
will be disregarded; they will have no effect on the outcome of the vote.
- We will vote on ratification of the appointment of the independent auditor.
The appointment will be ratified if approved by a majority of the shares
present. Abstentions will be counted; they will have the same effect as a
vote against the matter. Broker non-votes will be disregarded; they will not
affect the outcome of the vote.
- We will vote on each stockholder proposal, if properly brought before the
meeting. Each stockholder proposal will be approved if it receives the
affirmative vote of a majority of the shares present. Abstentions will be
counted; they will have the same effect as a vote against the matter. Broker
non-votes will be disregarded; they will not affect the outcome of the vote.
We have retained Georgeson & Company, Inc. to help in distributing proxy
materials and soliciting proxy voting instructions. Georgeson's estimated fee
for this work is not more than $20,000 plus payment of reasonable out-of-pocket
expenses. The initial solicitation is by mail. In addition, Albertson's
directors, officers or employees may solicit proxies in person or by telephone,
facsimile, telegram or e-mail.
Albertson's will also reimburse brokerage houses and other custodians for their
expenses in sending proxy materials to you.
As a stockholder, you may review a complete list of stockholders entitled to
vote at the meeting. The list will be available at the Idaho Center, 16200
Can-Ada Road, Nampa, Idaho, during ordinary business hours for the ten days
immediately before the meeting.
3
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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The following table shows the persons (including any group deemed a "person"
under Section 13(d)(3) of the Securities Exchange Act of 1934) known to the
Company who beneficially own more than 5% of the Company's common stock. It also
shows beneficial ownership for each director, for each nominee for director, for
each executive officer named in the Summary Compensation Table and for the
executive officers and directors as a group.
SHARES BENEFICIALLY OWNED AS OF MARCH 15, 2000(1)
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<TABLE>
<CAPTION>
NAME (AND ADDRESS NUMBER OF SHARES
FOR BENEFICIAL BENEFICIALLY PERCENT
OWNERS OVER 5%) OWNED(2) OF CLASS
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<S> <C> <C>
Capital Research and Management Company(3)............... 49,622,240 11.7%
333 South Hope Street
Los Angeles, CA 90071
Markus Stiftung(4)....................................... 29,152,800 6.9%
Timmasper Weg
2353 Nortorf
Federal Republic of Germany
Kathryn Albertson........................................ 6,000(5) +
A. Gary Ames............................................. 20,108(5) +
Cecil D. Andrus.......................................... 12,100(5) +
Pamela G. Bailey......................................... 10,070(5) +
Teresa Beck.............................................. 96,065(6) +
Henry I. Bryant.......................................... 12,045(5) +
John B. Carley........................................... 519,032 +
Paul I. Corddry.......................................... 23,108(5) +
John B. Fery............................................. 30,393(5) +
Fernando R. Gumucio...................................... 19,806(5) +
Clark A. Johnson......................................... 27,958(5) +
Charles D. Lein.......................................... 34,933(5) +
Victor L. Lund........................................... 961,075 +
Gary G. Michael.......................................... 393,103(6,7) +
Beatriz Rivera........................................... 13,108(5) +
J.B. Scott............................................... 6,010,877(5,9) 1.4%
Arthur K. Smith.......................................... 28,810 +
Thomas L. Stevens, Jr.................................... 4,500(5) +
Will M. Storey........................................... 20,108(5) +
Steven D. Symms.......................................... 14,610(5) +
Thomas J. Wilford........................................ 6,127,047(9,10) 1.4%
Carl W. Pennington....................................... 252,945(6,7) +
Michael F. Reuling....................................... 191,651(6,7) +
Thomas R. Saldin......................................... 135,944(6,7) +
David G. Simonson........................................ 110,578(6,7) +
All directors (including nominees) and all executive
officers as a group (31)............................... 9,798,946(5,6,7,8,9,10) 2.3%
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</TABLE>
+ Indicates that the percentage of shares beneficially owned does not exceed one
percent of the Company's common stock.
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LOGO
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(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Shares are considered to be "beneficially"
owned if the person has the sole or shared power to vote or direct the voting of
the securities or the sole or shared power to dispose of or direct the
disposition of the securities. A person is also considered to be the beneficial
owner of shares if that person has the right to acquire beneficial ownership of
the shares within 60 days following March 15, 2000.
(2) Each director, nominee for director and executive officer disclaims
beneficial ownership of any shares owned by his or her spouse, children or
grandchildren and by trusts for such person, whether or not the director or
officer is a trustee or co-trustee thereof.
(3) According to an amendment to a Schedule 13G filed with the Securities and
Exchange Commission on or about February 11, 2000, Capital Research and
Management Company, an investment advisor registered under Section 203 of the
Investment Advisors Act of 1940, is deemed to be a beneficial owner as the
result of acting as investment advisor to various investment companies
registered under Section 8 of the Investment Company Act of 1940.
(4) According to a Schedule 13D filed with the Securities and Exchange
Commission on or about January 18, 1990, Mr. Theo Albrecht is also a beneficial
owner of these shares. Mr. Albrecht's address is the same as that of Markus
Stiftung.
(5) Includes shares that could have been acquired within 60 days after March 15,
2000 under the 1995 Stock Option Plan for Non-Employee Directors and the Amended
and Restated 1995 Stock-Based Incentive Plan and under options converted from
American Stores Company option plans.
(6) Includes shares credited to the Albertson's Savings & Retirement Estates,
the Employee Stock Ownership Plan and the American Stores Company Employee Stock
Purchase Plan accounts of the individuals named and all executive officers as a
group.
(7) Includes shares that could have been acquired within 60 days after March 15,
2000 under the 1986 Nonqualified Stock Option Plan and the Amended and Restated
1995 Stock-Based Incentive Plan and under options converted from American Stores
Company option plans.
(8) Includes shares as to which certain executive officers included in all
executive officers as a group have sole voting and investment power but which
are held for minor children and relatives and as to which they disclaim any
beneficial interest.
(9) Includes 6,003,600 shares held by Alscott Limited Partnership #1 of which
Alscott, Inc., an Idaho corporation, is the general partner and J.B. Scott and
Thomas J. Wilford are limited partners. J.B. Scott is the Chairman of the Board
of and has a majority interest in Alscott, Inc., and Thomas J. Wilford is the
President and a director of Alscott, Inc.
(10) Includes 36,870 shares held by a family trust for the benefit of
descendants of Kathryn Albertson of which Thomas J. Wilford is the trustee and
84,800 shares held by family trusts for the benefit of the children of J.B.
Scott of which Thomas J. Wilford is one of the trustees. Mr. Wilford disclaims
beneficial ownership of these shares.
5
<PAGE> 10
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THE BOARD OF DIRECTORS
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The business and affairs of Albertson's, Inc., are managed under the direction
of the Company's Board of Directors. The Board monitors the overall performance
of the Company and oversees strategic planning, including the capital
expenditures budget. The Board also monitors the Company's financial controls
and reviews and ratifies selection and compensation of senior executives.
Currently, the Board of Directors of Albertson's, Inc. is made up of 20 members,
one of whom is an Albertson's employee. The Board's Nominating Committee
assesses the size and composition of the Board at least annually. That committee
recommends prospective directors to the Board.
The Nominating Committee will consider nominees recommended by Albertson's
stockholders. To make a recommendation, you must write to the Corporate
Secretary of the Company. You must provide:
- The individual's name,
- Biographical information about that person, and
- Qualifications of that person for the Board.
You may also propose a candidate at the Annual Meeting of Stockholders if you
have written to the Corporate Secretary of the Company to state your intention
to do so and if you have complied with specific requirements in the Company
By-Laws.
Your Board of Directors met at four regular meetings and four special meetings
during 1999. All directors attended at least 75 percent of the meetings of the
Board and of the committees of which they were members.
The Board has four standing committees: the Executive Committee, Audit
Committee, Compensation Committee and Nominating Committee. It also has two
special committees: the Grantor Trust Committee and the Outside Directors'
Committee. A non-employee director chairs each committee. The membership and
responsibilities of the committees are detailed in the chart on page 15.
6
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ELECTION OF DIRECTORS
(PROPOSAL 1)
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The Board of Directors is divided into three classes. Each year, the directors
in one class stand for election. They are elected to three-year terms.
The Board of Directors has acted to reduce the number of Class II directors from
seven to six because incumbent John B. Carley is not standing for re-election to
the Board and has nominated six individuals for election as Class II directors
this year. Each is nominated for a term that will expire in 2003. They are:
- A. Gary Ames
- Paul I. Corddry
- Fernando R. Gumucio
- Beatriz Rivera
- Arthur K. Smith
- Thomas J. Wilford
Each nominee already serves as a director. Fernando R. Gumucio and Arthur K.
Smith were members of the American Stores Company board of directors prior to
the merger in 1999. After the merger, they were appointed to Albertson's Board
of Directors. All other nominees have previously been elected by the Albertson's
stockholders.
Unless you specify otherwise, your proxy will be voted for the election of all
these nominees.
You can find information about each nominee and each continuing director below.
Unless otherwise indicated, the directors have been engaged in the same
principal occupation for the last five years. Directors' ages are stated as of
March 15, 2000.
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NOMINEES FOR ELECTION AS CLASS II DIRECTORS
TERM EXPIRING IN 2003
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A. GARY AMES
Director
since 1988
Age 55
President and Chief Executive Officer, MediaOne International (formerly U S West
International), a telecommunications company, since July 1995. President and
Chief Executive Officer, U S West Communications from 1990 to 1995. Mr. Ames is
a director of Flextech, Tektronix, Inc. and Telewest. Member of the
Compensation, Nominating and Outside Directors' Committees.
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PAUL I. CORDDRY
Director
since 1987
Age 63
Served as Senior Vice President, Europe, of H.J. Heinz Company, a worldwide
provider of processed food products and services, until his retirement in 1992.
Mr. Corddry is a director of Ameristar Casinos, Inc. Member of the Executive,
Nominating and Outside Directors' Committees.
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7
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FERNANDO R. GUMUCIO
Director
since 1999
Age 65
Owner and President of The Lafayette Group, a management consulting company,
since 1993. Formerly Chairman of the Board and Chief Executive Officer of Del
Monte USA from 1987 to 1988 and its President from 1984 to 1987. Mr. Gumucio is
a director of Basic Vegetable Products Corporation. Member of the Compensation
and Outside Directors' Committees.
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BEATRIZ RIVERA
Director
since 1995
Age 49
Member of Energy Resource Associates, LLC, a consulting firm working with
Honeywell Power Systems, Inc., since May 1999. Member of the Public Utilities
Commission of the State of New Mexico from 1995 through 1998. Owner of Infiniti
of Albuquerque, an automobile dealership, from 1990 to 1995. Ms. Rivera is a
director of Greer Properties, Inc., a member of the Board of Trustees for the
Tomas Rivera Policy Institute and El Rancho de las Golondrinas (Spanish Colonial
Arts Museum) and a member of the International Women's Forum, the New Mexico
Women's Forum and the New Mexico Venture Capital Advisory Committee to the New
Mexico State Investment Council. Chairman of the Nominating Committee and member
of the Outside Directors' Committee.
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ARTHUR K. SMITH
Director
since 1999
Age 62
Chancellor of the University of Houston System and President of the University
of Houston main campus since April 1997. Formerly President of the University of
Utah from August 1991 through March 1997. Member of the Executive and Outside
Directors' Committees.
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THOMAS J. WILFORD
Director
since 1999
Age 57
President and a director of Alscott, Inc., real estate and other investments,
since April 1997 and President and a director of the J.A. and Kathryn Albertson
Foundation, Inc., focusing on education within Idaho, since 1997. Secretary-
Treasurer and a director of Alscott, Inc. and the J.A. and Kathryn Albertson
Foundation, Inc. from 1993 to 1997. Managing Partner of the Anchorage, Alaska
office of Ernst & Young LLP from 1986 to 1993 and Managing Partner of the Boise
office of Ernst & Young LLP from 1978 to 1986. Mr. Wilford is a director of
DSRG, Inc. Member of the Audit, Nominating and Outside Directors' Committees.
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8
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LOGO
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CONTINUING CLASS III DIRECTORS
TERM EXPIRING IN 2001
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CECIL D. ANDRUS
Director
since 1995
Age 68
Chairman of the Andrus Center for Public Policy, a public policy forum located
at Boise State University dealing in natural resource issues, since January 1995
and of counsel to the Gallatin Group, a consulting firm, since February 1995.
Elected Governor of the State of Idaho in 1987 and served until January 1995.
Served as Secretary of the Interior in the Carter Administration from 1977
through 1980. Mr. Andrus is a director of Coeur d'Alene Mines Corporation,
KeyCorp and the J.A. and Kathryn Albertson Foundation, Inc., focusing on
education within Idaho. Chairman of the Grantor Trust Committee and member of
the Outside Directors' Committee.
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PAMELA G. BAILEY
Director
since 1999
Age 51
Chief Executive Officer and President of the Health Industry Manufacturers
Association, a worldwide medical technology trade association, since June 1999.
Served as Chief Executive Officer of The Healthcare Leadership Council from 1990
to June 1999. Formerly President of the National Committee for Quality Health
Care from 1987 to January 1997. Member of the Audit and Outside Directors'
Committees.
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HENRY I. BRYANT
Director
since 1999
Age 57
Served as Managing Director in the Corporate Finance Unit of J.P. Morgan & Co.
Incorporated, an investment banking firm, from February 1987 until his
retirement in February 1998. Member of the Audit and Outside Directors'
Committees.
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JOHN B. FERY
Director
since 1974
Age 70
Served as Chairman of the Board of Boise Cascade Corporation, a timber and paper
products company, until his retirement in 1995 and Chief Executive Officer from
1972 to 1994. Mr. Fery is a director of The Boeing Company. Chairman of the
Outside Directors' Committee and member of the Executive and Grantor Trust
Committees.
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9
<PAGE> 14
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J.B. SCOTT
Director
since 1993
Age 46
Chairman of the Board of Directors of Alscott, Inc., real estate and other
investments, and Chairman of the Board and a director of the J.A. and Kathryn
Albertson Foundation, Inc., focusing on education within Idaho. Grandson of
Kathryn Albertson. Mr. Scott is a director of DSRG, Inc. Member of the Audit,
Grantor Trust and Outside Directors' Committees.
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WILL M. STOREY
Director
since 1992
Age 68
Served as Executive Vice President and Chief Financial Officer, American
President Companies, Inc., a provider of container transportation services,
until his retirement in 1995. Chairman of the Audit Committee and member of the
Compensation and Outside Directors' Committees.
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CONTINUING CLASS I DIRECTORS
TERM EXPIRING IN 2002
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TERESA BECK
Director
since 1999
Age 45
Served as President of American Stores Company from March 1998 to June 1999 and
Chief Financial Officer from March 1995 to March 1998. Ms. Beck is a director of
Questar Corporation and Textron Inc. Member of the Grantor Trust and Outside
Directors' Committees.
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CLARK A. JOHNSON
Director
since 1989
Age 68
Served as Chairman of the Board of Pier 1 Imports, Inc., a retailer of imported
goods, until his retirement in 1999, and Chief Executive Officer until 1998. Mr.
Johnson is a director of InterTan, Inc., Metromedia International Group, Niagra
Mohawk Holdings, Inc. and PSS World Medical, Inc. Chairman of the Compensation
Committee and member of the Outside Directors' Committee.
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10
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LOGO
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CHARLES D. LEIN
Director
since 1975
Age 58
President and Chief Operating Officer of Stuller Settings, Inc., a jewelry
manufacturing and wholesaling company, and its subsidiaries, Stuller Service
Centers, Inc., Stuller Thailand Limited, Stuller Israel Diamonds Limited,
Stuller Settings Southwest, Inc., Stuller Service Centers Canada Co. and Stuller
Manufacturing, Inc., since January 1994. Formerly Chairman of the Board,
President and Chief Executive Officer of Black Hills Jewelry Manufacturing Co.
from 1982 to 1993. President, University of South Dakota from 1977 to 1982 and
Dean of the College of Business, Boise State University from 1973 to 1977. Mr.
Lein is a director of Stuller Settings, Inc. and Bank One, Lafayette Region.
Member of the Compensation, Grantor Trust and Outside Directors' Committees.
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VICTOR L. LUND
Director
since 1999
Age 52
Served as Chairman of the Board of American Stores Company from June 1995 to
June 1999 and Chief Executive Officer of American Stores Company from 1992 to
June 1999. President of American Stores Company from August 1992 to June 1995.
Mr. Lund is a director of the Borders Group, Inc. and Service Corporation
International. Vice Chairman of the Board and member of the Nominating and
Outside Directors' Committees.
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GARY G. MICHAEL
Director
since 1979
Age 59
Chairman of the Board and Chief Executive Officer of the Company. Mr. Michael is
the Chairman of the Board of Directors of the Federal Reserve Bank of San
Francisco and a director of Boise Cascade Corporation and Questar Corporation.
Member of the Executive Committee.
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11
<PAGE> 16
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THOMAS L. STEVENS, JR.
Director
since 1996
Age 66
Served as President, Los Angeles Trade-Technical College (LATTC) until his
retirement in 1996. Mr. Stevens was a member of the Board of Directors of the
Federal Reserve Bank of San Francisco, Los Angeles Branch until his retirement
from LATTC. Mr. Stevens is the former Chairman and current member of the
Executive Committee of Goodwill Industries of Southern California and is a
member of the Executive Committee of the Braille Institute. Member of the
Compensation, Executive and Outside Directors' Committees.
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STEVEN D. SYMMS
Director
since 1993
Age 61
Partner in Symms and Haddow, a consulting firm, since April 1999 and President
of Symms, Lehn & Associates, a consulting firm, since 1993. Elected United
States Senator from the State of Idaho in 1980 and served until January 1993.
Vice President and Secretary of Boise Air Service, Inc. since 1983. Mr. Symms is
a Director of Boise Air Service, Inc. and PanAmerican Capital Group, Inc. Member
of the Audit, Grantor Trust and Outside Directors' Committees.
- --------------------------------------------------------------------------------
DIRECTOR EMERITUS
- --------------------------------------------------------------------------------
KATHRYN ALBERTSON
Age 91
The Board of Directors of the Company has designated Mrs. Kathryn Albertson as
Director Emeritus of the Company for the rest of her life in recognition of her
position as the widow of the Company's founder, J.A. Albertson, and her many
years of service on the Board of Directors. As Director Emeritus, Mrs. Albertson
is entitled, but not required, to attend Board of Directors' meetings but will
not vote at, or be counted in the quorum for, Board of Directors' meetings. Mrs.
Albertson is director emeritus of the J.A. and Kathryn Albertson Foundation,
Inc., focusing on education within Idaho. Prior to 1997, she was President and a
director of Alscott, Inc., real estate and other investments. She is the
grandmother of J.B. Scott.
- --------------------------------------------------------------------------------
12
<PAGE> 17
LOGO
- --------------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
During the fiscal year ended February 3, 2000, one store lease and two office
space leases were held by Alscott Real Estate LLC, as landlord, and Albertson's,
Inc. as tenant. Alscott Real Estate LLC is managed by Alscott, Inc., an Idaho
corporation of which J.B. Scott, a director of the Company, is Chairman of the
Board and has a majority ownership interest and of which Thomas J. Wilford, a
member of the Board of Directors, is President and a director. The term of the
store lease is for a period of 37 years with the expiration date of the primary
term occurring in 2007. The office space leases are for a 20 year primary term
and a 5 year primary term expiring in 2017 and 2004. The total rentals and
common area maintenance fees paid by the Company under the leases to this
landlord during the fiscal year ended February 3, 2000 were $999,994.
During the fiscal year ended February 3, 2000, 7 store leases were held by DSRG,
Inc., as landlord, and Albertson's, Inc., or one of its wholly-owned
subsidiaries, as tenant, and DSRG, Inc. served as the common area maintenance
director for 4 other stores leased by Albertson's Inc. or one of its
wholly-owned subsidiaries. DSRG, Inc. is a real estate investment trust of which
J.B. Scott and Thomas J. Wilford are directors and of which Alscott Limited
Partnership owns over 10%. The general partner of Alscott Limited Partnership is
Alscott, Inc., an Idaho corporation of which J.B. Scott is Chairman of the Board
and has a majority ownership interest and Thomas J. Wilford is President and a
director, and the limited partners include J.B. Scott and Thomas J. Wilford. The
store leases are for various primary terms ranging from 2001 to 2019. The total
rentals and common area maintenance fees paid by the Company under the leases to
this landlord during the fiscal year ended February 3, 2000 were $1,196,749.
James Smith, brother-in-law of Richard J. Navarro, Senior Vice President and
Controller and a reporting officer of the Company during the fiscal year ended
February 3, 2000, is the owner of Tynick Services, Inc., a retail and wholesale
electronics distributor. During the fiscal year ended February 3, 2000, the
Company paid $188,874 to Tynick Services, Inc. for electronics equipment.
In the opinion of management, all of the foregoing transactions were fair and
reasonable and were entered into on terms not less favorable than could be
obtained in transactions with responsible third parties.
On August 2, 1998 the Company entered into a Termination and Consulting
Agreement with American Stores Company and Victor L. Lund (the "Consulting
Agreement") in connection with the American Stores Company merger. Mr. Lund was
Chairman of the Board of American Stores Company and is now the Vice Chairman of
the Board of Directors of the Company, a non-officer position. The Consulting
Agreement provides that Mr. Lund shall be appointed to the Board of Directors of
the Company for a term or terms extending until the third annual meeting of the
Company following the consummation of the American Stores Company merger, and
that while he is a member of such board, he will serve as its Vice Chairman. Mr.
Lund has also agreed to provide specified consulting services of up to 1,000
hours to the Company and American Stores Company for one year following the
termination of his employment upon consummation of the American Stores Company
merger, which occurred on June 23, 1999, for a fee of $850,000. Similar to
certain employment agreements that Mr. Lund had with American Stores Company,
Mr. Lund and his wife are being provided, under the Consulting Agreement, with
certain lifetime health coverage benefits and with additional cash payments if
necessary to make them whole for any taxes imposed on such benefits. Instead of
providing office space and operating services through October 31, 2012, as
required by the previous employment agreements with American Stores Company, Mr.
Lund was paid $39,000
13
<PAGE> 18
- --------------------------------------------------------------------------------
and a lump sum of $1.2 million in satisfaction of this obligation during the
fiscal year ended February 3, 2000. Upon termination of employment upon
consummation of the American Stores Company merger on June 23, 1999, Mr. Lund
received title to his company-owned vehicle. During the one-year consulting
term, Mr. Lund is receiving fringe benefits (including expense reimbursement and
transportation) consistent with the fringe benefits afforded to him immediately
before the consummation of the American Stores Company merger. Upon Mr. Lund's
permanent disability or death, he or his estate, as applicable, will receive a
lump sum payment of the consulting fee for the remainder of the one-year
consulting term. Upon a termination of his consulting services for "cause," no
further payments would be made. Mr. Lund is subject to a noncompetition covenant
while serving as a consultant or member of the Company's Board of Directors and
to a confidentiality covenant. Mr. Lund is indemnified by the Company and by
American Stores Company, a wholly-owned subsidiary of the Company, with respect
to his consulting services. As provided in his previous employment agreements
with American Stores Company, Mr. Lund is entitled to an additional payment for
any excise tax on excess parachute payments to which he may be subject and was
paid $3.7 million in such payments during the fiscal year ended February 3,
2000. The Company has agreed to guarantee all payments and benefits under the
Consulting Agreement. The Consulting Agreement also acknowledges that the
consummation of the American Stores Company merger on June 23, 1999 permitted
Mr. Lund to terminate his employment and receive the severance benefits called
for by the existing employment agreements with American Stores Company. The
Consulting Agreement acknowledges that upon the termination of Mr. Lund's
employment after the American Stores Company merger, he was to receive a cash
lump sum payment equal to the sum of (i) his base salary to the extent not
already paid; (ii) pro rata bonuses for the year of termination; (iii) an amount
in cash equal to three times his base salary and bonus amount ($4.3 million);
and (iv) a lump sum payment of the present value of his "Special Long-Range
Retirement Plan" benefit which vested in full upon consummation of the American
Stores Company merger ($11.7 million, based upon an assumed discount rate of
8.25%). All of such amounts have been paid to Mr. Lund.
Two members of the Company's Board of Directors who were formerly members of the
American Stores Company Board of Directors, Fernando R. Gumucio and Arthur K.
Smith, have full-recourse interest bearing notes outstanding for the purchase of
stock under an American Stores Company stock plan. The interest rate on Mr.
Gumucio's loan is 7.04%, the highest aggregate outstanding balance of the loan
during the fiscal year was $190,380 and the amount of the loan outstanding on
February 3, 2000 was $93,245. The interest rate on Mr. Smith's loan is 6.15%,
the highest aggregate outstanding balance of the loan during the fiscal year was
$230,823, and the amount of the loan outstanding on February 3, 2000 was
$109,367.
14
<PAGE> 19
LOGO
- --------------------------------------------------------------------------------
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
COMMITTEES COMMITTEE FUNCTIONS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
AUDIT COMMITTEE Reviews work of independent auditors and internal
Standing committee auditors and reports to the full Board. Monitors
4 meetings in fiscal 1999 internal accounting and financial functions of the
Company.
- ------------------------------------------------------
Pamela G. Bailey Will M. Storey* Investigates conflicts of interest, compliance with
Henry I. Bryant Steven D. Symms ethical standards and compliance with laws and
J.B. Scott Thomas J. Wilford regulations.
- ------------------------------------------------------------------------------------------------------------
COMPENSATION COMMITTEE Reviews salaries and bonuses paid to Company
Standing committee executive officers. Selects key employees to receive
3 meetings in fiscal 1999 stock option grants and determines the terms of the
grants.
- ------------------------------------------------------
A. Gary Ames Charles D. Lein
Fernando R. Gumucio Thomas L. Stevens, Jr.
Clark A. Johnson* Will M. Storey
- ------------------------------------------------------------------------------------------------------------
EXECUTIVE COMMITTEE Exercises the authority of the Board of Directors
Standing committee between meetings of the full Board.
No meetings in fiscal 1999
- ------------------------------------------------------
John B. Carley* Gary G. Michael
Paul I. Corddry Arthur K. Smith
John B. Fery Thomas L. Stevens, Jr.
- ------------------------------------------------------------------------------------------------------------
NOMINATING COMMITTEE Selects nominees to fill Board vacancies and to
Standing committee replace retiring Board members.
2 meetings in fiscal 1999
- ------------------------------------------------------
A. Gary Ames Beatriz Rivera*
Paul I. Corddry Thomas J. Wilford
Victor L. Lund
- ------------------------------------------------------------------------------------------------------------
GRANTOR TRUST COMMITTEE Administers deferred compensation plans and
Special committee retirement benefit makeup plans for executives.
2 meetings in fiscal 1999 Administers trusts established in relation to these
plans.
- ------------------------------------------------------
Cecil D. Andrus* Charles D. Lein
Teresa Beck J. B. Scott
John B. Fery Steven D. Symms
- ------------------------------------------------------------------------------------------------------------
OUTSIDE DIRECTORS' COMMITTEE Reviews the progress and performance of the Company
Special committee on a periodic basis.
3 meetings in fiscal 1999
- ------------------------------------------------------
A. Gary Ames Charles D. Lein
Cecil D. Andrus Victor L. Lund
Pamela G. Bailey Beatriz Rivera
Teresa Beck J.B. Scott
Henry I. Bryant Arthur K. Smith
John B. Carley Thomas L. Stevens, Jr.
Paul I. Corddry Will M. Storey
John B. Fery* Steven D. Symms
Fernando R. Gumucio Thomas J. Wilford
Clark A. Johnson
- ------------------------------------------------------------------------------------------------------------
* Committee chairman
- ------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 20
- --------------------------------------------------------------------------------
COMPENSATION OF DIRECTORS
- --------------------------------------------------------------------------------
Albertson's executive officers do not receive additional compensation for their
service as directors.
Albertson's believes that compensation for non-employee directors should be
competitive and should encourage increased ownership of Albertson's stock.
Each non-employee director receives:
- $10,000 per quarter. The final quarterly payment is made only if the
director has attended 75 percent of the meetings of the Board and the
committees on which he or she serves.
- An annual award of $60,000 of Albertson's common stock. Each director may
choose to receive his or her award in Company stock, deferred Company
stock equivalents or stock options to purchase Company stock at a ratio
of four stock option shares for every share of Company stock.
Each non-employee director may elect to defer payment of his or her director's
cash compensation into the Company's nonqualified deferred compensation plan for
non-employee directors.
Director Emeritus Kathryn Albertson receives an annual fee of $35,000. She does
not receive any stock grants.
- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
The following table sets forth the compensation paid for each of the Company's
last three fiscal years to (i) the Chief Executive Officer of the Company and
(ii) the four other most-highly compensated executive officers of the Company
for the last completed fiscal year:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL SALARY(1) BONUS(1) COMPENSATION(2) OPTIONS COMPENSATION(3)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
------------------ ------ ---------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 1999 $1,120,385 $672,692 $106,936 941,541 $171,743
Chairman of the Board and Chief 1998 899,423 756,800 -- 0 151,582
Executive Officer and a director 1997 750,000 351,000 -- 100,000 135,892
Michael F. Reuling 1999 423,750 338,154 63,360 314,211 23,541
Vice Chairman of the Company 1998 299,943 188,340 -- 0 19,986
1997 285,000 78,000 -- 25,000 17,265
Carl Pennington 1999 438,077 229,688 85,190 392,355 46,145
Executive Vice President, Marketing 1998 349,942 206,400 -- 0 37,065
1997 335,000 91,000 -- 25,000 30,696
Thomas R. Saldin 1999 356,539 249,712 58,681 196,178 17,386
Executive Vice President 1998 299,943 180,600 -- 0 13,092
and General Counsel 1997 285,000 78,000 -- 25,000 10,100
David G. Simonson 1999 381,827 200,661 56,952 196,178 4,620
Executive Vice President, Operations 1998 274,943 193,500 -- 0 2,825
1997 260,000 62,563 -- 15,000 1,831
</TABLE>
16
<PAGE> 21
LOGO
- --------------------------------------------------------------------------------
(1) Includes amounts deferred by certain of the named executive officers
pursuant to the Company's qualified and nonqualified deferred compensation
programs.
(2) This column includes the value for income tax purposes of noncash personal
benefits. The amounts indicated for Mr. Michael and Mr. Pennington include
$35,511 and $21,365, respectively, for the value of personal use of corporate
aircraft. The amounts indicated for each of the named executives include
$54,050, $53,325, $55,151, $55,513 and $52,232, respectively, for the value of
the Company provided automobile. Approximately $45,000 of this amount for each
of the named executives relates to the discontinuation of the Company provided
automobile program.
(3) This column includes $22,000 in fiscal years 1999, 1998 and 1997 for Gary G.
Michael, which is a fixed annual amount, in addition to salary and bonus,
contributed by the Company and deferred into the Company's nonqualified deferred
compensation plans. The remaining amount consists of interest accrued at
above-market rates (as defined by the rules of the Securities and Exchange
Commission) on compensation deferred pursuant to the Company's nonqualified
deferred compensation programs.
- --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT DATE VALUE
UNDERLYING GRANTED TO ----------------
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT VALUE(2)
NAME (#) YEAR ($/SH)(1) DATE ($)
---- ---------- ---------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Gary G. Michael 390,721 7.01% $51.1875 06/23/09 $4,671,398
Chairman of the Board and Chief Executive Officer 550,820 7.97 30.5000 12/05/09 5,020,648
and a director
Michael F. Reuling 78,145 1.40 51.1875 06/23/09 934,289
Vice Chairman of the Company 236,066 3.42 30.5000 12/05/09 2,151,709
Carl W. Pennington 156,289 2.80 51.1875 06/23/09 1,868,566
Executive Vice President, Marketing 236,066 3.42 30.5000 12/05/09 2,151,709
Thomas R. Saldin 78,145 1.40 51.1875 06/23/09 934,289
Executive Vice President and General Counsel 118,033 1.71 30.5000 12/05/09 1,075,854
David G. Simonson 78,145 1.40 51.1875 06/23/09 934,289
Executive Vice President, Operations 118,033 1.71 30.5000 12/05/09 1,075,854
</TABLE>
- --------------------------------------------------------------------------------
(1) The closing market price on the date the option was granted.
(2) In accordance with the rules of the Securities and Exchange Commission,
"Grant Date Value" has been calculated using the Black-Scholes model of option
valuation, adjusted to reflect the option term representative of the
individual's grant. The model also assumes: (a) a risk-free rate of return
represented by the interest rate on a U.S. Treasury Bond with a maturity date
corresponding to that of the adjusted option term; (b) expected volatility using
the implied volatility for call options traded on the date of the grant; and (c)
a dividend yield determined by dividing the 1999 cash dividends declared by the
option price. The values which may ultimately be realized by the holder of the
reported option will depend on the market value of the Company's common stock
during the periods during which the option is exercisable, which may vary
significantly from the assumptions underlying the Black-Scholes model.
17
<PAGE> 22
- --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE+ OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
ACQUIRED ON VALUE+ --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary G. Michael 32,000 $516,000 150,000 941,541 $ 0 0
Chairman of the Board and Chief
Executive Officer and a director
Michael F. Reuling 0 0 60,000 314,211 48,750 0
Vice Chairman of the Company
Carl W. Pennington 0 0 90,000 392,355 525,000 0
Executive Vice President, Marketing
Thomas R. Saldin 0 0 110,000 196,178 217,875 0
Executive Vice President and General
Counsel
David G. Simsonson 23,000 913,125 85,000 196,178 163,500 0
Executive Vice President, Operations
</TABLE>
- --------------------------------------------------------------------------------
+ The dollar values are calculated by determining the difference between the
closing price on the New York Stock Exchange Composite Tape for the Company's
common stock at exercise or at fiscal year-end (February 3, 2000) for
exercisable and unexercisable options and the exercise price of the options.
- --------------------------------------------------------------------------------
RETIREMENT BENEFITS
- --------------------------------------------------------------------------------
The Company maintains two defined benefit plans which were amended as of
November 20, 1999. One plan covers eligible salaried employees and one covers
eligible hourly employees, and both are governed by ERISA. The Plans will not
add any new participants after August 1, 1999 (last semi-annual enrollment date
before amendment) except as required under collective bargaining agreements. The
Company adopted a defined contribution plan, Albertson's Savings & Retirement
Estates ("ASRE"), effective September 26, 1999, which will be the Company's
primary retirement plan. The defined benefit plans will serve as floor-offset
arrangements for the employees who were participants in one of the pension plans
as of August 1, 1999; that is, the participant will receive a combined pension
plan and ASRE benefit that is at least as large as the benefit that the pension
plan alone would have provided prior to amendment. The Company will first
calculate a base benefit under the pension plan as of November 20, 1999 and,
secondly, will calculate the participant's projected benefit under the pension
plan as if it had remained in effect without being amended. The Company will
then add the base benefit to the annuity equivalent of the participant's ASRE
profit sharing account. If the projected benefit is higher, the pension plan
will pay the difference. If the base benefit plus ASRE is higher, the pension
plan pays only the base benefit.
The amount of benefit under the pension plan is based on credited years of
service and the participant's compensation. The compensation used in determining
the benefit for the individuals named in the Summary Compensation Table consists
of the employee's salary and deferred compensation and does not include bonus
and noncash compensation. The table on page 19 gives the estimated annual
benefit payable upon retirement for participants in the salaried pension plan,
including benefits payable under the Executive Pension Makeup Plan (as defined
on page 19) for those individuals who were covered as of August 1, 1999. The
estimates assume normal retirement at age 62 for employees at specified
compensation levels (based on average earnings for the highest five consecutive
years of service out of the last ten years) with various years of service with
the Company.
18
<PAGE> 23
LOGO
- --------------------------------------------------------------------------------
SALARIED PENSION PLAN TABLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS OF SERVICE
COMPENSATION ---------------------------------------------------------------
LEVEL 20 25 30 35 40 45
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000.... $ 27,000 $ 33,750 $ 40,500 $ 47,250 $ 54,000 $ 60,750
200,000.... 54,000 67,500 81,000 94,500 108,000 121,500
300,000.... 81,000 101,250 121,500 141,750 162,000 182,250
400,000.... 108,000 135,000 162,000 189,000 216,000 243,000
500,000.... 135,000 168,750 202,500 236,250 270,000 303,750
600,000.... 162,000 202,500 243,000 283,500 324,000 364,500
700,000.... 189,000 236,250 283,500 330,750 378,000 425,250
800,000.... 216,000 270,000 324,000 378,000 432,000 486,000
900,000.... 243,000 303,750 364,500 425,250 486,000 546,750
1,000,000.... 270,000 337,500 405,000 472,500 540,000 607,500
1,100,000.... 297,000 371,250 445,500 519,750 594,000 668,250
</TABLE>
- --------------------------------------------------------------------------------
As of February 3, 2000, the years of service credited to the executive officers
listed in the Summary Compensation Table were: Mr. Michael, 34; Mr. Reuling, 26;
Mr. Pennington, 36; Mr. Saldin, 21; and Mr. Simonson, 27. Also as of such date,
the covered compensation for the last fiscal year of these executive officers
under the Company's pension plans was: Mr. Michael, $1,117,308; Mr. Reuling,
$419,808; Mr. Pennington, $435,577; Mr. Saldin, $355,769; and Mr. Simonson,
$380,288.
The amounts presented in the salaried pension plan table are single life
annuities notwithstanding the availability of joint and survivor annuity
provisions.
Retirement benefits otherwise available to key executives under the Company's
qualified defined benefit plans have been limited by the effects of the Internal
Revenue Code of 1986, as amended (the "Code"). For example, the maximum annual
benefit under a qualified pension plan under the Code is limited to $130,000 for
1999 (subject to certain exceptions). The Company has complied with this
limitation to assure continuing qualification of its plans. To offset the loss
of retirement benefits associated with tax law limitations, the Company adopted
a nonqualified Executive Pension Makeup Plan effective June 1, 1988 and an ASRE
Makeup Plan on September 26, 1999 ("Makeup Plans"). Benefits are provided under
the Makeup Plans for key employees equal to those that would otherwise be lost
by such qualified plan limitations. All amounts for any benefits accrued under
the Makeup Plans are included in the figures in the Summary Compensation Table.
19
<PAGE> 24
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Compensation Committee of the Board of Directors (the "Committee") is
comprised solely of directors who are not current or former employees of the
Company. The Committee is responsible for establishing the compensation policy
and administering the compensation programs for the Company's executive officers
and other key employees. The Committee periodically engages independent
compensation consultants to assist it in this process. In carrying out its
duties, the Committee intends to make all reasonable attempts to comply with the
requirements to exempt executive compensation from the $1 million deduction
limitation under Section 162(m) of the Internal Revenue Code, unless the
Committee determines that such compliance in given circumstances would not be in
the best interests of the Company and its stockholders.
COMPENSATION PHILOSOPHY
The compensation program for executive officers is designed to attract, motivate
and retain talented executives who will strive to attain the Company's strategic
and financial objectives, and thereby increase stockholder value. The principal
elements of the program consist of base salary, short-term incentives under the
annual bonus plan and long-term incentives in the form of stock option awards.
The Company's philosophy is to position the aggregate of these elements at a
level which is commensurate with the Company's size and performance relative to
other leading wholesale and retail companies. The Committee periodically reviews
the reasonableness of total compensation levels and mix using public information
from comparator company proxy statements and survey information from credible
third-party industry surveys.
BASE SALARY
The Committee annually reviews and approves base salaries for the Company's
executive officers, considering the responsibilities of their positions, their
individual performance and their competitive position relative to comparator
companies and industry surveys. Salary increases, including increases due to
promotions, for the most recent fiscal year were based on these criteria.
ANNUAL BONUS
Senior operations executive officers are eligible to receive annual incentive
awards under a stockholder approved bonus program. Under the stockholder
approved plan, threshold levels of pre-established performance goals must be
attained before any awards are paid. For the most recent fiscal year, these
performance goals were based on sales, earnings per share and return on assets
goals.
Once the Committee has certified that the threshold performance goals are
attained for senior operations executive officers, actual award payments for
those officers and for the other executive officers are based on more aggressive
performance goals, weighted to a greater extent on sales and diluted earnings
per share goals and to a lesser extent on return on assets goals. For the most
recent fiscal year, target award opportunities ranged from 60 to 80 percent of
base salary, and the maximum award opportunity was 150 percent of the target
award. A portion of the award may be further adjusted based on individual or
subjective performance criteria. Based on overall Company and individual
performance for the most recent fiscal year, actual award payments for 1999
ranged from 75 percent to 100 percent of target award opportunities for the
Company's executive officers named in the Summary Compensation Table. A portion
of the award for the named executive officers was based on the Committee's
discretionary assessment of overall performance in connection with the American
Stores Company merger.
STOCK OPTIONS
Due to the American Stores Company merger, stock options were not granted to
executive
20
<PAGE> 25
LOGO
- --------------------------------------------------------------------------------
officers of the Company during the 1998 fiscal year and two grants of stock
options were made in the most recent fiscal year, including grants to the named
executive officers. These options were granted by the Committee with a ten-year
term and generally vest on a pro rata basis over five years beginning on the
first anniversary of the grant and were granted according to pre-established
grant guidelines that are intended to be competitive both individually and in
the aggregate with the comparator companies. In the future, the Committee
intends to grant stock options on an annual basis.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is comprised principally of base
salary, annual bonus and stock option awards. In addition, the Chief Executive
Officer receives an annual $22,000 contribution to the Company's nonqualified
deferred compensation plan. Compensation levels and opportunities are
established by the Committee in a manner generally consistent with that of the
other executive officers. For the 1999 fiscal year, the Committee established a
base salary of $1,100,000 for the Chief Executive Officer, which represented an
increase of $200,000 over fiscal year 1998. The Chief Executive Officer did not
receive an increase in base salary for fiscal year 2000. The Chief Executive
Officer received an annual bonus payment of $672,692, which represents 75
percent of his target award opportunity and which was paid pursuant to the 1999
goals established pursuant to the stockholder approved plan. The Chief Executive
Officer received two stock option awards during the most recent fiscal year,
consistent with the treatment accorded other executive officers.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C>
Clark A. Johnson, Charles D. Lein
Chairman Thomas L. Stevens, Jr.
A. Gary Ames Will M. Storey
Fernando R. Gumucio
</TABLE>
21
<PAGE> 26
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph provides a comparison of the five-year cumulative total
return* for the Standard & Poor's 500 Index, the Standard & Poor's Retail
Store-Food Chains Index and the Company.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
S & P RETAIL (FOOD
ALBERTSON'S, INC. S & P 500 CHAINS)
----------------- --------- ------------------
<S> <C> <C> <C>
1/95 100 100 100
1/96 115.25 138.67 126.52
1/97 121.05 175.20 148.31
1/98 167.98 222.34 202.87
1/99 217.34 294.58 292.81
1/00 110.51 325.06 170.44
</TABLE>
* $100 invested on January 31, 1995 in stock or index -- including reinvestment
of dividends.
Fiscal year ending January 31.
22
<PAGE> 27
LOGO
- --------------------------------------------------------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
- --------------------------------------------------------------------------------
As recommended by the Audit Committee, the Board of Directors has reappointed
Deloitte & Touche LLP as independent auditors for fiscal year 2000. As
independent auditors, Deloitte & Touche LLP will audit the books, records and
accounts of Albertson's, Inc., and its subsidiaries. The Board asks that the
stockholders ratify this appointment.
Deloitte & Touche LLP has audited the financial statements of the Company for
each fiscal year since 1967. Services to be performed for fiscal year 2000
include:
- Audit of annual financial statements,
- Limited review of quarterly financial information,
- Consultations in connection with various financial reporting, accounting
and income tax matters, and
- Certain consulting services.
Representatives of Deloitte & Touche LLP will attend the Annual Meeting of
Stockholders. They will have an opportunity to make a statement, if they desire
to do so. They also will be available to respond to appropriate questions.
It would be difficult and expensive to change auditors in the middle of a fiscal
year. If the stockholders defeat the appointment of Deloitte & Touche LLP, the
Board of Directors likely would allow the appointment to stand for fiscal year
2000 and the Audit Committee would recommend a different firm of auditors for
the following year.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSAL
(PROPOSAL 3)
- --------------------------------------------------------------------------------
Gerald R. Armstrong has notified the Company that he intends to present the
following resolution at the Annual Meeting. Mr. Armstrong holds 1,914 shares of
Albertson's common stock. His address is 910 Fifteenth Street, No. 754, Denver,
Colorado 80202-2924, and his telephone number is (303) 355-1199.
The Board of Directors and the Company accept no responsibility for the proposed
resolution and supporting statement. As required by federal regulations, the
resolution and supporting statement are printed below.
STOCKHOLDER RESOLUTION:
Resolved: That the shareholders of ALBERTSON'S, INC., assembled in person and by
proxy in an annual meeting, request that the Board of Directors take those steps
necessary to cause annual elections for all directors by providing that at
future elections in annual meetings, all directors be elected annually and not
by classes as is now provided and that on the expiration of the present terms
their subsequent elections shall also be on an annual basis.
STOCKHOLDER SUPPORTING STATEMENT:
Last year, 62,572,511 shares, or 32% of the shares represented in the annual
meeting voted in favor of this proposal.
As earnings expectations of shareholders and professional investors are not
being met and no explanation of the sudden "resignation" of Richard L. King,
President and member of the Board of Directors, and the related "termination
benefits" paid him have not been disclosed to shareholders, the proponent
believes greater accountability is needed.
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<PAGE> 28
- --------------------------------------------------------------------------------
Anti-takeover provisions are present which negate any need for three year terms
for directors.
Ameritech, Time-Warner, Lockheed-Martin, Campbell Soups, Atlantic Richfield,
Pacific Enterprise, Westinghouse and other corporations have replaced three year
terms with the annual election of all directors.
Occidental Petroleum Corporation stated in its 1997 proxy statement in support
of replacing three year terms with one year terms for its directors:
"the current Board of Directors . . . . does recognize that under current views
of corporate governance a classified board is believed to offer less protection
against unfriendly takeover attempts than previously assumed while frustrating
stockholders in their exercise of oversight of the board. The Board of Directors
believes that the best interests of stockholders are not currently served by
maintaining a classified board."
These actions have increased shareholder voting rights by 300% -- and, at no
cost to the shareholders.
The proponent believes the current system produces only a facade of continuity
which should be displaced; and accountability and performance be substituted as
the basis for re-election to our board of directors.
At Albertson's, this procedure will allow shareholders an opportunity to
register annually their reviews of the performance of the Board collectively and
of each director, individually. Concern that annual elections of all directors
would leave Albertson's without experienced directors is unfounded.
If you agree, please vote FOR this proposal. If your proxy is unmarked on this
issue, your shares will be automatically voted "AGAINST" this proposal.
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposal 3 for the following
reasons:
Your Board of Directors believes that a classified board continues to serve the
Company, you, the stockholders, and those with whom the Company does business by
permitting all to rely on the consistency and continuity of corporate policy. At
the same time, annual elections in which approximately one-third of the Board is
elected each year offer stockholders a regular opportunity to renew and
reinvigorate corporate decision-making while maintaining the basic integrity of
corporate policy from year to year for the benefit of all who rely on it.
A system of classified directors also benefits stockholders by making corporate
takeovers by proxy contest more difficult. Since only approximately one-third of
the Company's directorships are filled at any annual meeting of stockholders, it
is impossible to elect an entire new Board or even a majority of the Board at a
single meeting. Incumbent directors always represent a majority of the Board and
are in a position to protect the interests of all stockholders.
The stockholders of the Company adopted the present system of classified
directors at the 1980 Annual Meeting of Stockholders by a vote of 77 percent of
the outstanding shares.
Our stockholders have rejected a similar proposal in each of the past six years.
While a stockholder has the right to submit this proposal year after year,
provided the proposal receives at least 10 percent of the vote, your Board of
Directors believes that the stockholders should continue to defeat the proposal.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTERESTS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 3.
24
<PAGE> 29
LOGO
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSAL
(PROPOSAL 4)
- --------------------------------------------------------------------------------
The Company has been notified that Catholic Healthcare West, 1700 Montgomery
Street, Suite 300, San Francisco, California 94111-1024, the holder of 44,435
shares of Albertson's common stock, intends to present the following resolution
at the Annual Meeting. The resolution is also sponsored by two other
stockholders. Their names, addresses and the number of shares they hold will be
provided upon request.
The Board of Directors and the Company accept no responsibility for the proposed
resolution and supporting statement. As required by federal regulations, the
resolution and supporting statement are printed below.
STOCKHOLDER RESOLUTION:
WHEREAS:
Leaders of industry in the United States now acknowledge their obligation to
pursue superior environmental performance and to disclose information about that
performance to their investors and other stakeholders.
The integrity, utility, and comparability of environmental disclosure depend on
using a common format, credible metrics, and a set of generally accepted
standards. This will enable investors to assess environmental progress within
and across industries.
The Coalition for Environmentally Responsible Economies (CERES) -- a ten-year
partnership between large investors, environmental groups, and
corporations -- has established what we believe is the most thorough and
well-respected environmental disclosure form in the United States. CERES has
also taken the lead internationally, convening major organizations together with
the United Nations Environment Programme in the Global Reporting Initiative,
which has produced guidelines for standardizing environmental disclosure
worldwide.
Companies which endorse the CERES Principles engage with stakeholders in
transparent environmental management and agree to a single set of consistent
standards for environmental reporting. That standard is set by the endorsing
companies together with CERES.
The CERES Principles and CERES Report have been adopted by leading firms in
various industries: Arizona Public Service, Bank America, BankBoston, Baxter
International, Bethlehem Steel, Coca-Cola, General Motors, Interface, ITT
Industries, Northeast Utilities, Pennsylvania Power and Light, Polaroid, and Sun
Company.
We believe endorsing the CERES Principles commits a company to the prudent
oversight of its financial and physical resources through: 1) protection of the
biosphere; 2) sustainable use of natural resources; 3) waste reduction; 4)
energy conservation; 5) risk reduction; 6) safe products/services; 7)
environmental restoration; 8) informing the public; 9) management commitment;
10) audits and reports. (The full text of the CERES Principles and accompanying
CERES Report form are obtainable from CERES, 11 Arlington Street, Boston
Massachusetts 02116, (617) 247-0700/www.ceres.org)
RESOLVED:
Shareholders request that the Company endorse the CERES Principles as a
reasonable and beneficial component of their corporate commitment to be publicly
accountable for environmental performance.
STOCKHOLDER SUPPORTING STATEMENT:
Recent studies show that the integration of environmental commitment into
business operations provides competitive advantage and improves long-term
financial performance for companies. In addition, the depth of a firm's
environmental commitment and the quality with which it manages its environmental
performance are indicators of prudent foresight exercised by management.
Given investors' needs for credible information about a firm's environmental
performance, and given the number of companies that have al-
25
<PAGE> 30
- --------------------------------------------------------------------------------
ready endorsed the CERES Principles and adopted its report format, it is a
reasonable, widely accepted step for a company to endorse those Principles if it
wishes to demonstrate its seriousness about superior environmental performance.
Your vote FOR this resolution serves the best interests of our Company and its
shareholders.
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
- --------------------------------------------------------------------------------
Your Board of Directors recommends a vote AGAINST Proposal 4 for the following
reasons:
Your Board of Directors believes that adopting this proposal would unduly burden
Albertson's and its stockholders while adding nothing to our environmental
efforts. Adoption of the CERES Principles would require a lengthy and complex
annual report and additional administrative costs for programs that already
exist within our Company.
RECYCLING AND REDUCING WASTE:
Recycling is a high priority at Albertson's. We have recycling programs for
corrugated cardboard, plastic grocery bags, plastic pallet wrap, aluminum cans,
truck tires, used antifreeze, used motor oil, fluorescent light bulbs,
construction materials, paving materials, photo finish, office supplies and
paper products. Albertson's also works to reduce waste by encouraging vendors to
reduce packaging. We use returnable plastic totes and plastic pallets where
appropriate to reduce waste.
USING ENERGY WISELY:
Albertson's is dedicated to reducing energy use. Wherever possible, low-energy
systems are built into facilities to provide the appropriate levels of light at
reduced energy costs.
MAKING SAFETY A PRIORITY:
We strive to provide a safe shopping experience for our customers and a safe
place to work for our employees. Every employee is involved in the safety
effort, and each store has environmental programs.
GETTING THE WORD OUT:
Albertson's publishes information regarding its environmental programs on the
Internet at www.albertsons.com and in the company profile. Every store shows our
commitment to recycling and the environment by collecting plastic grocery bags
and other recyclables. Our volunteer efforts in our communities have spread the
word about our proactive efforts to promote environmental programs.
Our Company has been recognized by many local and state government agencies for
our commitment to the environment. In both 1998 and 1999, our Albertson's stores
in California were awarded the California Integrated Waste Board's WRAP award.
Our Fort Worth distribution center was awarded the Fort Worth Clean City, Inc.
Star Award for its recycling efforts. Our ice cream plant was awarded the City
of Boise Enviroguard award.
Albertson's already practices many of the principles suggested by this proposal.
We work to sustain natural resources, reduce waste, promote safety and safe
products, protect the environment, and inform the public about our efforts. Your
Board of Directors does not believe any benefit to the environment would result
from the additional administrative effort and cost required by this proposal.
FOR THE FOREGOING REASONS, YOUR BOARD OF DIRECTORS BELIEVES THAT THIS PROPOSAL
IS NOT IN THE BEST INTEREST OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT YOU
VOTE AGAINST PROPOSAL 4.
26
<PAGE> 31
LOGO
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Company is not aware of any other matters to be submitted at the Annual
Meeting. If any other matters properly come before the meeting, the proxy
holders intend to vote the shares they represent as the Board of Directors may
recommend.
- --------------------------------------------------------------------------------
DEADLINE FOR RECEIPT OF STOCKHOLDERS' PROPOSALS
- --------------------------------------------------------------------------------
Proposals by stockholders of the Company that are intended to be presented at
the Company's 2001 Annual Meeting of Stockholders pursuant to Rule 14a-8 under
the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), must
be received by the Company at the Company's principal executive offices not
later than December 29, 2000. In order for a stockholder proposal to be eligible
for inclusion in the proxy statement and proxy card for that meeting, the
proposing stockholder must:
- - Submit the proposal to the Company in a timely manner,
- - Specifically request that it be included, and
- - Satisfy the eligibility and procedural requirements of Rule 14a-8 under the
Exchange Act.
In order for stockholder proposals made outside of Rule 14a-8 of the Exchange
Act to be considered "timely" within the meaning of Rule 14a-4(c) of the
Exchange Act, such proposals must be received by the Company at the Company's
principal executive offices not later than March 17, 2001. The Company's By-Laws
require that proposals of stockholders made outside of Rule 14a-8 of the
Exchange Act must be submitted, in accordance with the requirements of the
By-Laws, not later than March 17, 2001 or earlier than February 15, 2001.
27
<PAGE> 32
[RECYCLE LOGO]
<PAGE> 33
PROXY
[ALBERTSONS LOGO]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ALBERTSONS, INC.
THE UNDERSIGNED HEREBY APPOINTS GARY G. MICHAEL, MICHAEL F. REULING AND THOMAS
R. SALDIN, AND EACH OF THEM, AS PROXIES FOR THE UNDERSIGNED, EACH WITH FULL
POWER OF SUBSTITUTION, TO REPRESENT THE UNDERSIGNED AND TO VOTE ALL SHARES OF
COMMON STOCK OF ALBERTSON'S, INC. (THE "COMPANY") THAT THE UNDERSIGNED IS
ENTITLED TO VOTE IN THE MANNER INDICATED ON THE REVERSE SIDE HEREOF, AND WITH
DISCRETIONARY AUTHORITY AS TO ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE
THE COMPANY'S 2000 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON THURSDAY, JUNE
15, 2000, AND AT ANY AND ALL ADJOURNMENTS THEREOF, AS SET FORTH UNDER THE
HEADING "OTHER MATTERS" IN THE ACCOMPANYING PROXY STATEMENT. IF NO OTHER
INDICATION IS MADE, AT THE MEETING AND AT ANY AND ALL ADJOURNMENTS THEREOF, THE
PROXYHOLDERS WILL VOTE FOR (I) THE ELECTION OF DIRECTOR NOMINEES AND (II) THE
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS AND WILL VOTE
AGAINST PROPOSALS 3 AND 4.
(PLEASE DATE AND SIGN ON REVERSE SIDE)
* FOLD AND DETACH HERE *
[ALBERTSONS LOGO]
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JUNE 15, 2000
10:00 A.M.
IDAHO CENTER
16200 CAN-ADA ROAD
NAMPA, IDAHO
IF YOU PLAN TO ATTEND THE MEETING AND YOUR SHARES ARE HELD IN THE NAME OF A
BROKER OR OTHER NOMINEE, PLEASE BRING A STATEMENT OR LETTER FROM THE BROKER OR
NOMINEE CONFIRMING YOUR OWNERSHIP OF SHARES.
<PAGE> 34
PLEASE MARK
YOUR VOTE
LIKE THIS. [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. ELECTION OF SIX DIRECTORS TO CLASS II.
01 A. GARY AMES
02 PAUL I. CORDDRY
03 FERNANDO R. GUMUCIO
04 BEATRIZ RIVERA
05 ARTHUR K. SMITH
06 THOMAS J. WILFORD
FOR ALL NOMINEES
[ ]
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES
[ ]
TO WITHHOLD AUTHORITY FOR ANY NOMINEE, CHECK THE "FOR" ALL NOMINEES BOX ABOVE
AND WRITE THAT NOMINEE'S NAME ON LINE BELOW:
________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
3. STOCKHOLDER PROPOSAL TO DECLASSIFY THE BOARD OF DIRECTORS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.
4. STOCKHOLDER PROPOSAL TO ADOPT THE CERES PRINCIPLES FOR PUBLIC ENVIRONMENTAL
ACCOUNTABILITY.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
I HOLD ADDITIONAL ACCOUNTS AND DO NOT WISH TO CONTINUE RECEIVING DUPLICATE
COPIES OF ALBERTSON'S MATERIAL. PLEASE DISCONTINUE MAILINGS, OTHER THAN MY
PROXY, TO THIS ACCOUNT.
[ ]
I PLAN TO ATTEND ALBERTSON'S 2000 ANNUAL MEETING OF STOCKHOLDERS.
[ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE VOTED AS
DIRECTED THEREIN. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AND AGAINST PROPOSALS 3 AND 4.
SIGNATURE(S)___________________________________________DATED:___________, 2000
THIS PROXY SHOULD BE SIGNED EXACTLY AS NAME APPEARS HEREON. EXECUTORS,
ADMINISTRATORS, TRUSTEES AND SO FORTH, SHOULD GIVE FULL TITLE AS SUCH. IF THE
SIGNATORY IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY A DULY AUTHORIZED
OFFICIAL. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AN AUTHORIZED
PARTY. IF SHARES ARE HELD IN MULTIPLE NAMES, AT LEAST ONE MUST SIGN AS AN
AUTHORIZED PARTY.
* FOLD AND DETACH HERE *
VOTE BY TELEPHONE OR INTERNET
[TELEPHONE GRAPH] QUICK ** EASY ** IMMEDIATE [COMPUTER GRAPHIC]
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD IN THE
ENCLOSED ENVELOPE.
VOTE BY PHONE: CALL 1-800-840-1208 ON A TOUCH-TONE PHONE 24 HOURS A DAY. THERE
IS NO CHARGE TO YOU FOR THIS CALL. TELEPHONE VOTING IS AVAILABLE
UNTIL 5:00 P.M. EDT ON WEDNESDAY, JUNE 14, 2000. YOU WILL BE
ASKED TO ENTER YOUR CONTROL NUMBER (LOOK BELOW AT RIGHT).
OPTION A: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL MATTERS,
PRESS 1. THEN, WHEN ASKED, YOU MUST CONFIRM YOUR VOTE BY PRESSING
1 AGAIN.
OPTION B: IF YOU CHOOSE TO VOTE AGAINST OR ABSTAIN ON ANY MATTER, PRESS 0.
YOU WILL HEAR THESE INSTRUCTIONS FOR EACH ITEM TO BE VOTED UPON.
ITEM 1: TO VOTE FOR, PRESS 1; AGAINST, PRESS 9; ABSTAIN, PRESS 0.
WHEN ASKED, YOU MUST CONFIRM YOUR VOTE BY PRESSING 1.
VOTE BY INTERNET: HTTP://WWW.EPROXY.COM/ABS/ THERE MAY BE INTERNET CHARGES
(USAGE OR SERVER FEES) THAT MUST BE PAID BY THE STOCKHOLDER.
PLEASE HAVE THIS CARD HANDY WHEN YOU CALL OR LOG ON TO THE INTERNET. YOU'LL NEED
IT IN ORDER TO COMPLETE THE VOTING PROCESS.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF YOU VOTE BY TELEPHONE OR INTERNET.
FOR TELEPHONE OR INTERNET VOTING, YOUR CONTROL NUMBER IS:
